Microsoft Admits Fear of Linux

Microsoft has long pooh-poohed Linux as a desktop competitor. But a recent filing with the Security and Exchange Commission has the company admitting for the first time that Linux represents a significant threat to Windows.

TechFlash reports that in Microsoft's recent annual filing with the SEC, it listed for the first time Ubuntu's maker Canonical, and Linux distributor Red Hat as competitors to its Client division, which makes Windows. Previously, TechFlash says, Red Hat was listed but only as a competitor to its Business and Server & Tools divisions.

In its annual filing, Microsoft warns that Linux is a threat to Windows, particularly in emerging markets and for netbooks. It also warns that Apple is a threat, but it's said that before. The big news is the addition of Linux. Here's what the filing says:

Client faces strong competition from well-established companies with differing approaches to the PC market. Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat. Apple takes an integrated approach to the PC experience and has made inroads in share, particularly in the U.S. and in the consumer segment. The Linux operating system, which is also derived from Unix and is available without payment under a General Public License, has gained some acceptance, especially in emerging markets, as competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption. Partners such as Hewlett-Packard and Intel have been actively working with alternative Linux-based operating systems.

The filing goes on to add that Windows is also threatened by platforms and devices that might curtail demand for PCs. And it notes browser alternatives that could hurt it as well. Here's what the filing says:

TechFlash notes that Google, Apple, Opera, and Android are new in this section; last year only Mozilla was listed.

The upshot to all this? Microsoft knows that it's in for a tough battle, and that its cash cow is endangered.